"The more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector ..."
- Marc Carney, Canadian central bank governor
Consumer prices in Canada remained barely visible for the second month in a row in the last month of 2012, indicating weak domestic demand keeping the inflation below the bottom of the central bank's target band, as food and shelter costs moderated. The consumer price index added 0.8% in December from a year earlier, after the same reading in the prior month. In the meantime, core inflation, which excludes eight volatile products, fell to 1.1%, down from 1.2%, the slowest since February 2011. Analysts, however, expected both measures to increase with inflation and core inflation rising to 1.2% and 1.4%, respectively. The report also showed that consumer prices are expected to increase an average 1.1% in the October-December period and 0.9% in the first quarter of this year.
"The more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated," Carney, 47, said at a Jan. 23 press conference in Ottawa. The central bank's benchmark interest rate has been 1 percent since September 2010, the longest pause since the 1950s.
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